CFPB is suing payment platform used by YMCA camps and charity race organizers to illegally dump junk membership fees on consumers

WASHINGTON, DC – Today the Consumer Financial Protection Bureau (CFPB) sued online event registration company ACTIVE Network for tricking people trying to register for street racing and other events into signing up for its annual subscription discount club Active Advantage. The CFPB’s lawsuit describes how ACTIVE automatically and unlawfully enrolled families in its discount club by using digital duplication. Consumers, many of whom only thought they were signing up for a community race or event, were eventually accepted into a costly club. The CFPB requires ACTIVE to change this unlawful registration practice, indemnify consumers, and pay a penalty.

“The CFPB is suing ACTIVE Network for illegally collecting hundreds of millions of dollars in filing fees through the use of digital dark patterns and online tricks,” said CFPB Director Rohit Chopra. “People who thought they were just signing up for a charity race found out too late that the company was running away with their money.”

Headquartered in Plano, Texas, ACTIVE Network operates a payment system used by organizers of events and activities such as charity races and YMCA camps to allow attendee registration and payment. In 2017, it was bought by Global Payments Inc. (NYSE: GPN) for an alleged $1.2 billion.

ACTIVE collects the consumer’s registration and payment information and ACTIVE is then compensated with part of the registration fees. Separately, ACTIVE operates Active Advantage, a paid membership club that offers discounts on products and activities rarely related to the events that consumers have signed up to attend or support.

Dark patterns to increase registrations

Over the past decade, ACTIVE has increased Active Advantage sign-ups through the use of dark patterns. Dark patterns are hidden tricks or trapdoors that companies build into their websites to trick consumers into accidentally clicking on links, signing up for subscriptions, or purchasing products or services. While Active Advantage memberships include a 30-day free “Negative Option Trial,” Negative Option Trials will automatically begin collecting membership fees at the end of the trial period.

In a recent Federal Trade Commission report outlined, like dark patterns can be used to mislead consumers, obfuscate advertisements, make it harder to cancel subscriptions or recurring charges, and bury junk charges. In a recent action, the FTC notify companies that registrations must be clear, amicable and easy to cancel.

The CFPB alleges that ACTIVE violated the Consumer Financial Protection Act by enrolling consumers in discount club memberships and charging them fees without their knowledge, consent, or full understanding of the essential terms of the transaction. ACTIVE has had multiple opportunities to stop its illegal practices in light of high credit card chargeback rates, numerous customer complaints, and ACTIVE’s own data showing that a significant number of consumers were misled into signing up for Active Advantage. Still, ACTIVE continued to fool consumers with obscure patterns and surprise fees. Specifically, the CFPB’s lawsuit alleges that ACTIVE harmed consumers by:

• Dupe attendees who have registered for events into discount club memberships and push fees onto users’ credit cards: ACTIVE will include a webpage in its online event registration and payment process offering a free trial registration offer for Active Advantage. Many consumers click the highlighted call-to-action button — usually labeled “Accept” — believing they will accept charges from their credit or debit card to attend an event. In fact, ACTIVE is enrolling consumers for a trial membership of Active Advantage. The trial membership will automatically convert to a paid subscription with an annual fee of $89.95 unless consumers cancel their membership during the 30-day trial period.
• Failure to notify Active Advantage members of fee increases: ACTIVE increased its discount club’s annual membership fee without sending written notice of the new payment and the date of the new payment at least 10 days before charging members, in violation of the Electronic Fund Transfer Act and its Bylaws.

The CFPB alleges that as of July 21, 2011, ACTIVE has generated more than $300 million in fees from approximately 3 million Active Advantage memberships through the inserted enrollment offer. And as of July 21, 2011, members who signed up through in-line offers have only redeemed a fraction of the purported member benefits.

Two states, Iowa and Vermont, have separately sanctioned ACTIVE for violating state consumer protection laws. These actions resulted in settlements unique to the Company’s registration programs in those individual states.

enforcement actions

Under the Consumer Financial Protection Act, the CFPB has the power to take action against any company that violates consumer financial protection laws, including engaging in any unfair, fraudulent or abusive act or practice. The CFPB is seeking an injunction, consumer financial relief, disclosure of unjustified profits, and a civil fine.

The Complaint is not a final finding or ruling that the Defendants broke the law.

Read today’s complaint.

Read Director Rohit Chopra’s statement on the complaint against ACTIVE.

Consumers can file complaints about dark patterns and about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal laws protecting consumer finances, including through the use of dark patterns, are encouraged to send information of their knowledge to whistleblower@cfpb.gov.

The Consumer Financial Protection Bureau (CFPB) is a 21st-century agency that helps consumer financial markets work by making rules more effective, enforcing those rules consistently and fairly, and empowering consumers to take more control of their economic lives. For more information visit www.consumerfinance.gov.